The Blue Roof

Risk is part of life.  Everything we do carries some risk.  Eating, drinking, walking, sitting, driving and even doing nothing!  In fact, doing nothing is the biggest risk, since you are on the receiving end, where as you are at least to some measure in control or affecting what happens to you when you do something!

 Knowing about risk can result in one of two reactions.  We can be so aware of the risk and so scared of losing, that we become paralysed and do nothing – and inadvertendly taking the biggest risk!

 Or we can be so risk averse that we play so safe, trying to limit or prevent losses, that we cannot win and then lose anyway!

 Since risk is part of life, we need to acknowledge it and try to understand it.  I think it is part of the problem – we vaguely take note of risk, but we don’t define it or understand it.  We just hope for the best, and when we lose, we are upset.

 Where does this lead us?  What are the risks affecting your wealth and your efforts to create wealth right now?  What causes the risk and how does it affect you?

 Times like we are experiencing right now is the time when a lot of people will grow much wealthier – they use the risk factors to catapult them to new levels of wealth.  They grow their wealth with the help of the risk!

 The secret is to find someone who can help you to do the same.  Is there a way that you can protect your wealth and at the same time create more wealth?  In other words, can I keep my shares, but still make money if they drop in value?  How can I cover myself against non-paying tenants?  How can I buy more properties while the prices are low?  How can I make money from the drop in property prices?

 The info is out there – quite often free!  But don’t be scared to ask and pay for good advice!

 We are really in a very interesting spot economically. Currently the opportunities abound to create wealth. Property prices are down, only starting to show some increase in price. Ideal time to buy bargains. World stock exchanges are on a knife edge. Every time I open my stock broker’s account it seems as if there is only one way – down. Interest rates are low. So how do you invest?

 My sister, who retires at the end of the year, asked me what I think she should do with her money. And I replied – Money Market! She needs an income and to protect the capital. Any investment where she can invest to get an income, will tie her in at a very low interest rate. Remember, government bonds are inversely directly correlated to the interest rate. In other words, if interest rates are low, the capital value is high. And vice versa. If you want to know more about this, download Investments and Investing, my FREE e-book under Free Stuff.

 It just does not make sense to tie up your money and income, at the bottom of the interest rate cycle.

 I am very scared of the stock market, at the moment. I think I mentioned it before, but in 1929 and 1969 (I was only alive in 1969, but to stupid to know anything) the real drop in the market came later. It was almost as if there was a detrimental blow that took the markets into ICU, then some improvement and then a final death spasm. I am afraid that history will repeat itself. That is why we need to hedge our stock market positions.

 The problem is, obviously a lot of my sister’s investments are in stock market related instruments with the major insurance companies. So there is a double whammy – interest rates are low AND her capital has lost a lot of value. It is not a good situation! And I don’t really have a solution! And it is not as if she can sit back and wait for a recovery!

 The tragedy in this case is – she encouraged me to buy my first property! She had a number of properties which she bought and sold. And the other day I thought about it and realised – if she kept ALL her properties, she would be making enough income for herself and me!

 Now she pays a hefty price for the mistakes of the past – perhaps it was not a mistake, but lack of knowledge and insight!